Microsoft says it has formed a new 5,000-person engineering and research team to focus on its artificial intelligence products — a major reshaping of the company’s internal structure reminiscent of its massive pivot to pursue the opportunity of the Internet in the mid-1990s.

Qi Lu

“We are on the cusp of a paradigm shift in computing that is unlike anything we have seen in decades,” said Microsoft CEO Satya Nadella in an internal email to employees this morning, the text of which was obtained by GeekWire.

The company also confirmed internally this morning that eight-year Microsoft veteran Qi Lu, the top executive in charge of Office, Bing and related products, will be leaving the company “to focus all his time on recovering from health conditions caused by a prior injury,” according to Nadella’s email. Recode reports that Lu was in a bicycle accident several months ago.

The new Microsoft AI and Research Group, to be led by Microsoft Research chief Harry Shum, establishes a fourth engineering division inside the company, along with the Office, Windows and cloud groups.

The new group will absorb some of the key product engineering teams from the previous Applications and Services Group that was led by Lu, including Cortana and Bing. In addition, Microsoft says the new group will include Microsoft Research, the Information Platform Group, and the Ambient Computing and Robotics teams.

“End-to-end innovation in AI will not come from isolated research labs alone, but from the combination of at-scale production workloads together with deep technology advancements in algorithms, systems and experiences,” Shum says in a blog post. “The new group will provide greater opportunity to accelerate our innovation in AI, and to enable Microsoft to create truly intelligent systems and products for our customers.”

The remaining portions of the Applications and Services Group will be renamed the Office Product Group, led by Microsoft executive Rajesh Jha, who will join the company’s senior leadership team. As part of the changes, Nadella says in his email that top Skype executive Gurdeep Singh Pall will be shifting to a new role, with Jha now leading Skype, as well. Microsoft didn’t provide further details on Pall’s next role.

Harry Shum

Microsoft is competing against Amazon, Google, Facebook, Salesforce and many other rivals in an effort to lead the burgeoning field of artificial intelligence. Earlier this week, at the Microsoft Ignite business technology conference, Nadella said the company “is pursuing AI so that we can empower every person and every institution that people build with tools of AI, so that they can go on to solve the most pressing problems of our society and our economy.”

Here is the full text of Nadella’s memo to employees about the changes.

First, my friend and colleague Qi Lu has made a difficult and very personal decision to leave Microsoft to focus all his time on recovering from health conditions caused by a prior injury. Once Qi recovers, he will continue to serve as a personal advisor to Bill Gates and me. I wish Qi a full and fast recovery in the coming months, and want to thank him for all he has done for Microsoft.

Over the years, I’ve worked closely with Qi – first as an engineering leader within Bing, later as fellow members of the SLT, and most recently as he led ASG to new heights. The groundbreaking work Qi led during his eight years resulted in many product advances and built the foundation for future innovation across Microsoft. Qi exemplifies what it means to have a deep sense of mission, purpose and authenticity in everything one does. His greatest impact is the people he has inspired. I count myself among them.

As we look ahead, this week at Ignite I focused my keynote on democratizing AI for every person and every organization on the planet. We are on the cusp of a paradigm shift in computing that is unlike anything we have seen in decades. This will lead to artificial intelligence (AI) being infused broadly into our computing platforms and experiences. Advanced algorithms, hyper-scale compute capacity, and the ability to work across massive data sets are what enable us to drive this change in everything we do for customers.

To accelerate this vision, I have asked Harry Shum to lead the Microsoft AI and Research Group, bringing together for the first time our world-class research organization alongside all our AI product efforts. David Ku and the Information Platform Group along with Derrick Connell and the Bing and Cortana Engineering Group will now report to Harry. Vijay Mital and the Ambient Computing and Robotics Team will also be joining Harry’s team.

Rajesh Jha will step into the role of leading the Office Product Group reporting directly to me and joining the SLT starting today. Julie Larson-Green and Eran Megiddo will continue in their current and existing charters, reporting to Rajesh. Gurdeep Singh Pall and I have decided this is the right time for him to transition to his next role. Gurdeep will transition the Skype team to Rajesh over the coming weeks.

We have great momentum with Office 365 in both our business results and product innovation and have made dramatic strides in our evolution to offer productivity and communications as a service. We have much to do in support of our ambition to reinvent productivity, and I am counting on this team to move forward with boldness and urgency.

We live in a time when digital technology is impacting, and indeed transforming, every human endeavor and each of our customers. Our mission to empower every person and every organization on the planet to achieve more continues to guide all we do. It is through our mission and activating a growth mindset culture that will enable us to accelerate digital transformation both within our own company and in partnership with our customers.

Finally, I hope you join me for a special Monthly Q&A today at 9:00 a.m. PT. Harry, Rajesh and I look forward to sharing more and taking your questions.

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